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| [ Engrossed ] | [ Enrolled ] | [ Senate Amendment 002 ] |
90_SB0194
40 ILCS 5/1-113 from Ch. 108 1/2, par. 1-113
Amends the General Provisions Article of the Pension
Code. In the Section on investment authority, makes a
technical change. Effective immediately.
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1 AN ACT to amend the Illinois Pension Code by changing
2 Section 1-113.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Pension Code is amended by
6 changing Section 1-113 as follows:
7 (40 ILCS 5/1-113) (from Ch. 108 1/2, par. 1-113)
8 Sec. 1-113. Investment authority. The investment
9 authority of a board of trustees of a retirement system or
10 pension fund established under this Code shall, if so
11 provided in the Article establishing such retirement system
12 or pension fund, embrace the following investments:
13 (1) Bonds, notes and other direct obligations of the
14 United States Government; bonds, notes and other obligations
15 of any United States Government agency or instrumentality,
16 whether or not guaranteed; and obligations the principal and
17 interest of which are guaranteed unconditionally by the
18 United States Government or by an agency or instrumentality
19 thereof.
20 (2) Obligations of the Inter-American Development Bank,
21 the International Bank for Reconstruction and Development,
22 the African Development Bank, the International Finance
23 Corporation, and the Asian Development Bank.
24 (3) Obligations of any state, or of any political
25 subdivision in Illinois, or of any county or city in any
26 other state having a population as shown by the last federal
27 census of at least not less than 30,000 inhabitants provided
28 that such political subdivision is not permitted by law to
29 become indebted in excess of 10% of the assessed valuation of
30 property therein and has not defaulted for a period longer
31 than 30 days in the payment of interest and principal on any
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1 of its general obligations or indebtedness during a period of
2 10 calendar years immediately preceding such investment.
3 (4) Nonconvertible bonds, debentures, notes and other
4 corporate obligations of any corporation created or existing
5 under the laws of the United States or any state, district or
6 territory thereof, provided there has been no default on the
7 obligations of the corporation or its predecessor(s) during
8 the 5 calendar years immediately preceding the purchase.
9 (5) Obligations guaranteed by the Government of Canada,
10 or by any Province of Canada, or by any Canadian city with a
11 population of not less than 150,000 inhabitants, provided (a)
12 they are payable in United States currency and are exempt
13 from any Canadian withholding tax; (b) the investment in any
14 one issue of bonds shall not exceed 10% of the amount
15 outstanding; and (c) the total investments at book value in
16 Canadian securities shall be limited to 5% of the total
17 investment account of the board at book value.
18 (5.1) Direct obligations of the State of Israel for the
19 payment of money, or obligations for the payment of money
20 which are guaranteed as to the payment of principal and
21 interest by the State of Israel, or common or preferred stock
22 or notes issued by a bank owned or controlled in whole or in
23 part by the State of Israel, on the following conditions:
24 (a) The total investments in such obligations shall
25 not exceed 5% of the book value of the aggregate
26 investments owned by the board;
27 (b) The State of Israel shall not be in default in
28 the payment of principal or interest on any of its direct
29 general obligations on the date of such investment;
30 (c) The bonds, stock or notes, and interest thereon
31 shall be payable in currency of the United States;
32 (d) The bonds shall (1) contain an option for the
33 redemption thereof after 90 days from date of purchase or
34 (2) either become due 5 years from the date of their
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1 purchase or be subject to redemption 120 days after the
2 date of notice for redemption;
3 (e) The investment in these obligations has been
4 approved in writing by investment counsel employed by the
5 board, which counsel shall be a national or state bank or
6 trust company authorized to do a trust business in the
7 State of Illinois, or an investment advisor qualified
8 under the Federal Investment Advisors Act of 1940 and
9 registered under the Illinois Securities Act of 1953;
10 (f) The fund or system making the investment shall
11 have at least $5,000,000 of net present assets.
12 (6) Notes secured by mortgages under Sections 203, 207,
13 220 and 221 of the National Housing Act which are insured by
14 the Federal Housing Commissioner, or his successor assigns,
15 or debentures issued by such Commissioner, which are
16 guaranteed as to principal and interest by the Federal
17 Housing Administration, or agency of the United States
18 Government, provided the aggregate investment shall not
19 exceed 20% of the total investment account of the board at
20 book value, and provided further that the investment in such
21 notes under Sections 220 and 221 shall in no event exceed
22 one-half of the maximum investment in notes under this
23 paragraph.
24 (7) Loans to veterans guaranteed in whole or part by the
25 United States Government pursuant to Title III of the Act of
26 Congress known as the "Servicemen's Readjustment Act of
27 1944," 58 Stat. 284, 38 U.S.C. 693, as amended or
28 supplemented from time to time, provided such guaranteed
29 loans are liens upon real estate.
30 (8) Common and preferred stocks and convertible debt
31 securities authorized for investment of trust funds under the
32 laws of the State of Illinois, provided:
33 (a) the common stocks, except as provided in
34 subparagraph (h), are listed on a national securities
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1 exchange as defined in the Federal Securities Exchange
2 Act, or quoted in the National Association of Securities
3 Dealers Automated Quotation System (NASDAQ);
4 (b) the securities are of a corporation created or
5 existing under the laws of the United States or any
6 state, district or territory thereof;
7 (c) the corporation is not in arrears on payment of
8 dividends on its preferred stock;
9 (d) the total book value of all stocks and
10 convertible debt owned by any pension fund or retirement
11 system shall not exceed 40% of the aggregate book value
12 of all investments of such pension fund or retirement
13 system, except for that system governed by Article 17,
14 where the total of all stocks and convertible debt shall
15 not exceed 50% of the aggregate book value of all fund
16 investments;
17 (e) the book value of stock and convertible debt
18 investments in any one corporation shall not exceed 5% of
19 the total investment account at book value in which such
20 securities are held, determined as of the date of the
21 investment, and the investments in the stock of any one
22 corporation shall not exceed 5% of the total outstanding
23 stock of such corporation, and the investments in the
24 convertible debt of any one corporation shall not exceed
25 5% of the total amount of such debt that may be
26 outstanding;
27 (f) the straight preferred stocks or convertible
28 preferred stocks and convertible debt securities are
29 issued or guaranteed by a corporation whose common stock
30 qualifies for investment by the board; and
31 (g) that any common stocks not listed or quoted as
32 provided in subdivision 8(a) above be limited to the
33 following types of institutions: (a) any bank which is a
34 member of the Federal Deposit Insurance Corporation
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1 having capital funds represented by capital stock,
2 surplus and undivided profits of at least $20,000,000;
3 (b) any life insurance company having capital funds
4 represented by capital stock, special surplus funds and
5 unassigned surplus totalling at least $50,000,000; and
6 (c) any fire or casualty insurance company, or a
7 combination thereof, having capital funds represented by
8 capital stock, net surplus and voluntary reserves of at
9 least $50,000,000.
10 (9) Withdrawable accounts of State chartered and federal
11 chartered savings and loan associations insured by the
12 Federal Savings and Loan Insurance Corporation; deposits or
13 certificates of deposit in State and national banks insured
14 by the Federal Deposit Insurance Corporation; and share
15 accounts or share certificate accounts in a State or federal
16 credit union, the accounts of which are insured as required
17 by The Illinois Credit Union Act or the Federal Credit Union
18 Act, as applicable.
19 No bank or savings and loan association shall receive
20 investment funds as permitted by this subsection (9), unless
21 it has complied with the requirements established pursuant to
22 Section 6 of the Public Funds Investment Act.
23 (10) Trading, purchase or sale of listed options on
24 underlying securities owned by the board.
25 (11) Contracts and agreements supplemental thereto
26 providing for investments in the general account of a life
27 insurance company authorized to do business in Illinois.
28 (12) Conventional mortgage pass-through securities which
29 are evidenced by interests in Illinois owner-occupied
30 residential mortgages, having not less than an "A" rating
31 from at least one national securities rating service. Such
32 mortgages may have loan-to-value ratios up to 95%, provided
33 that any amount over 80% is insured by private mortgage
34 insurance. The pool of such mortgages shall be insured by
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1 mortgage guaranty or equivalent insurance, in accordance with
2 industry standards.
3 (13) Pooled or commingled funds managed by a national or
4 State bank which is authorized to do a trust business in the
5 State of Illinois, shares of registered investment companies
6 as defined in the federal Investment Company Act of 1940
7 which are registered under that Act, and separate accounts of
8 a life insurance company authorized to do business in
9 Illinois, where such pooled or commingled funds, shares, or
10 separate accounts are comprised of common or preferred
11 stocks, bonds, or money market instruments.
12 (14) Pooled or commingled funds managed by a national or
13 state bank which is authorized to do a trust business in the
14 State of Illinois, separate accounts managed by a life
15 insurance company authorized to do business in Illinois, and
16 commingled group trusts managed by an investment adviser
17 registered under the federal Investment Advisors Act of 1940
18 (15 U.S.C. 80b-1 et seq.) and under the Illinois Securities
19 Law of 1953, where such pooled or commingled funds, separate
20 accounts or commingled group trusts are comprised of real
21 estate or loans upon real estate secured by first or second
22 mortgages. The total investment in such pooled or commingled
23 funds, commingled group trusts and separate accounts shall
24 not exceed 10% of the aggregate book value of all investments
25 owned by the fund.
26 (15) Investment companies which (a) are registered as
27 such under the Investment Company Act of 1940, (b) are
28 diversified, open-end management investment companies and (c)
29 invest only in money market instruments.
30 (16) Up to 10% of the assets of the fund may be invested
31 in investments not included in paragraphs (1) through (15) of
32 this Section, provided that such investments comply with the
33 requirements and restrictions set forth in Sections 1-109,
34 1-109.1, 1-109.2, 1-110 and 1-111 of this Code.
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1 The board shall have the authority to enter into such
2 agreements and to execute such documents as it determines to
3 be necessary to complete any investment transaction.
4 Any limitations herein set forth shall be applicable only
5 at the time of purchase and shall not require the liquidation
6 of any investment at any time.
7 All investments shall be clearly held and accounted for
8 to indicate ownership by such board. Such board may direct
9 the registration of securities in its own name or in the name
10 of a nominee created for the express purpose of registration
11 of securities by a national or state bank or trust company
12 authorized to conduct a trust business in the State of
13 Illinois.
14 Investments shall be carried at cost or at a book value
15 in accordance with accounting procedures approved by such
16 board. No adjustments shall be made in investment carrying
17 values for ordinary current market price fluctuations; but
18 reserves may be provided to account for possible losses or
19 unrealized gains as determined by such board.
20 The book value of investments held by any pension fund or
21 retirement system in one or more commingled investment
22 accounts shall be the cost of its units of participation in
23 such commingled account or accounts as recorded on the books
24 of such board.
25 (Source: P.A. 86-272; 87-575; 87-794; 87-895.)
26 Section 99. Effective date. This Act takes effect upon
27 becoming law.